Tembec Renews Shareholder Rights Plan
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Tembec Inc., Montreal, Que., Canada, this past week approved the renewal of its Shareholder Rights Plan. The plan is subject to acceptance by the Toronto Stock Exchange, and is also subject to shareholder approval and ratification, which the company will seek at its Annual and Special Shareholder Meeting currently scheduled for Jan. 31, 2013. Subject to shareholder approval at such annual and special meeting, the plan would be effective as of January 31.
The plan is designed to encourage fair treatment of the company's shareholders in the event of any take-over bid for the company's common shares. It provides the board with sufficient time to assess and evaluate any unsolicited take-over bid, and to explore and develop, if appropriate, alternatives that enhance shareholder value and to give shareholders adequate time to consider any such transaction.
In connection with the plan, the board authorized the issuance of one right in respect of each common share of the company outstanding as of the close of business on Jan. 31, 2013, and one right will attach automatically to each common share issued after such date. Each right entitles the holder of the right to purchase from the company an additional common share at the exercise price, which has initially been set at C$100.00, subject to the terms and conditions set forth in the plan.
The rights will become exercisable only when a person, including any related party, acquires or announces its intention to acquire beneficial ownership of common shares which, when aggregated with its current holdings, total 20% or more of the company's outstanding common shares without complying with the "Permitted Bid" provisions of the Plan or without the approval of the board. Following the occurrence of such exercise event and subject to the terms and conditions of the Plan, each right would entitle the holder of the right, other than the acquiring person or any related persons, to exercise his or her right and purchase common shares of the company at a substantial discount to the market price at that time.
The Plan is not intended to prevent take-over bids. Under the Plan, a "Permitted Bid" is to be made to all registered holders of voting shares by way of a takeover bid circular prepared in accordance with applicable securities laws and must comply with certain other conditions.
Tembec notes that there is currently no proposed or pending unsolicited take-over bid for the company, of which management is aware. A copy of the plan is available online.
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